Bancolombia Assumes $881 Million Interbolsa Bond Operations

By Oscar Medina and Christine Jenkins -
Nov 6, 2012

Bancolombia SA (BCOLO), Colombia’s largest
bank, will assume control of local peso bonds managed by
Interbolsa SA to prevent trading disruptions after regulators
seized control of its brokerage last week.

“Interbolsa ceded to Bancolombia all the operations it has
associated with public debt so the market can function today
without any problem or holdup,” Finance Minister Mauricio Cardenas said in an interview today with Caracol Radio.

Chief Financial Regulator Gerardo Hernandez told reporters
in Bogota that government bonds managed by Interbolsa are worth
1.6 trillion pesos ($881 million). Colombian brokerages will be
able to tap into an existing 20 billion peso fund, known as
Fogacol, Hernandez said.

Financial regulators stepped in after Interbolsa said last
week that it couldn’t make a payment on a 20 billion peso loan,
saying it faced a “temporary” funding shortage.

The financial squeeze was specific to Interbolsa and
doesn’t represent systemwide weakness, Cardenas said in a Nov. 4
interview in Mexico City.

Bancolombia Chief Executive Officer Carlos Yepes said today
in a conference call with analysts that the bank’s potential
losses from loans to Interbolsa are “very small.”

Interbolsa also has an investment fund unit that had more
than 2 trillion pesos of assets under management as of April,
according to the company’s website. The company also operates a
brokerage in Brazil.

The peso appreciated 0.8 percent to 1,817.25 per dollar,
its biggest rally on a closing basis since Sept. 5.

“It shows how agile the authorities are being and is a
sign that others are prepared to step in,” said Rupert Stebbings, managing director for Colombia at Celfin Capital.